Judge: Maurice A. Leiter, Case: 21STCV28051, Date: 2022-10-27 Tentative Ruling

Case Number: 21STCV28051    Hearing Date: October 27, 2022    Dept: 54

Hearing Date: October 27, 2022

Department 54, Judge Maurice A. Leiter

Motion to Compel Arbitration

Moving Party: Defendants Joya Food Enterprises, Inc., et al.

Responding Party: Plaintiff Karina Lepe Tenorio

T/R:    DEFENDANTS’ MOTION TO COMPEL ARBITRATION IS GRANTED IN PART AND DEFERRED IN PART.  DEFENDANTS’ MOTION IS GRANTED AS TO PLAINTIFF’S INDIVIDUAL PAGA CLAIM.  THAT PORTION OF THE CASE IS STAYED PENDING BINDING ARBITRATION. 

THIS COURT DEFERS ITS RULING ON THE ISSUE OF DISMISSAL OF PLAINTIFF’S REPRESENTATIVE CLAIM PENDING THE CALIFORNIA SUPREME COURT’S DECISION IN ADOLPH V. UBER TECHNOLOGIES, CASE NO. S27467. 

If the parties wish to submit on the tentative, please email the courtroom at¿SMCdept54@lacourt.org¿with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

            The Court considers the moving papers, opposition, and reply.

BACKGROUND

            On July 30, 2021, Plaintiff filed a PAGA action against Defendants.

ANALYSIS

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate a controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists….”  (CCP § 1281.2.)  The right to compel arbitration exists unless the court finds that the right has been waived by a party’s conduct, other grounds exist for revocation of the agreement, or where a pending court action arising out of the same transaction creates the possibility of conflicting rulings on a common issue of law or fact.   (CCP § 1281.2(a)-(c).)  “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.”  (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

A.        Existence of Arbitration Agreement and Applicable Law

Defendants move to compel arbitration based on the “Agreement to Arbitrate Claims” executed by Plaintiff on November 14, 2018. (Decl. Gonzalez, Exh. A.) The agreement provides, “I and the [Defendants] agree to utilize binding arbitration as the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to my employment…” (Id.) This action arises from Plaintiff’s employment. The agreement provides that it is governed by the FAA.

B. Enforceability of Agreement

1. Individual PAGA Claims

Relying on the Supreme Court’s recent holding in Viking River Cruises v. Moriana, 142 S.Ct. 1906 (2022), Defendant asserts that Plaintiff’s individual PAGA claim should be severed and sent to arbitration, and the representative PAGA claims should be dismissed. Under the previous rule, set forth in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, an employee’s individual PAGA claims were not arbitrable even if the parties had agreed to arbitrate individual claims. The defendant employer in Iskanian had argued that “the arbitration agreement at issue here prohibits only representative claims, not individual PAGA claims for Labor Code violations that an employee suffered.” (Iskanian supra, 59 Cal.4th at p. 383.) Rejecting this, the California Supreme Court held that separating the individual and PAGA claims “frustrates the PAGA's objectives” because “a single-claimant arbitration under the PAGA for individual penalties will not result in the penalties contemplated under the PAGA to punish and deter employer practices that violate the rights of numerous employees under the Labor Code.” (Id. at p. 384.)  

The U.S. Supreme Court overturned this ruling, holding that “Iskanian’s prohibition on contractual division of PAGA actions into constituent claims unduly circumscribes the freedom of parties to determine the issues subject to arbitration and the rules by which they will arbitrate . . . and does so in a way that violates the fundamental principle that arbitration is a matter of consent.” (Viking River, supra, 142 S.Ct. at 1923, internal citations omitted.) The Court concluded that Iskanian’s rule improperly coerced parties to litigate all PAGA claims even where the parties agreed to arbitrate claims arising out of Labor Code violations suffered by the individual plaintiff. (Id. at p. 1924.)  

Here, the parties agreed to arbitrate employment disputes, including “claims pursuant to the California Labor Code.” (Decl. Gonzalez, Exh. A.) The agreement carves out an exception for representative PAGA claims, “unless state law permits such claims to be covered by this agreement…” (Id.)

Under the old Iskanian rule, Plaintiff’s individual PAGA claims would have been indivisible from the representative claims, thus precluding arbitration of the individual claims. But this division is now permitted under Viking River, and the agreement to arbitrate Plaintiff’s individual claims must be enforced.   

Viking River instructs that when parties agree to arbitrate disputes arising from Labor Code violations individually sustained by an employee, they must be held to that agreement, notwithstanding the resulting division of the PAGA claims. Plaintiff is bound by the agreement to arbitrate claims arising from Labor Code violations sustained by Plaintiff in the course of employment, even if it means separating those claims from the claims based on violations suffered by other employees.  

 Defendants’ Motion to Compel Arbitration is GRANTED as to Plaintiff’s individual PAGA claim. 

2. Dismissal of Plaintiff’s Representative PAGA Claim 

This brings us to the question of what should happen to Plaintiff’s non-individual claims, which are not subject to arbitration.  The Viking River Court held that a plaintiff loses standing to assert a non-individual PAGA claim once her own individual claims are compelled to arbitration. (Viking River, supra, 142 S.Ct. at p. 1925.)  The Supreme Court directly addressed what “should have been done” with the plaintiff’s non-individual claims:  

[A]s we see it, PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA's standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action. See Cal. Lab. Code Ann. §§ 2699(a), (c). When an employee's own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit. See¿Kim [v. Reins Int’l. California, Inc.] 9 Cal.5th [73,] 90, 259 Cal.Rptr.3d 769, 259 Cal.Rptr.3d, 459 P.3d at 1133¿(“PAGA's standing requirement was meant to be a departure from the ‘general public’ ... standing originally allowed” under other California statutes). As a result, Moriana lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims. Viking River Cruises, 142 S.Ct. 1906, Slip Opn. at 21.  

But the Supreme Court also recognized that this ultimately is an issue of state law. The California Supreme Court is set to decide the issue in Adolph v. Uber Technologies, Case No. S27467.  The California Supreme Court granted review on July 20, 2022, and on August 1, 2022 announced that the issue to be briefed is: “Whether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee…maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ in court or in any other forum the parties agree is arbitrable.” 

The Court will defer its ruling on the issue of dismissal of the representative claims pending the California Supreme Court’s decision in Adolph.